Answers to Everyday Questions : What is attrition rate ?

An attrition rate, also known as the “churn rate”, can be a measurement of two things – how many clients leave over a certain period or how many employees leave over a certain period. It can also be a combination of these two factors. Attrition rate is normally used in relation with a subscription service. Whether it is a cellular phone, magazine or internet provider, the attrition rate depends on the relationship’s stability with current customers in order to protect and grow. However, the term can also be applied to other kinds of companies as well.

An attrition rate is a great way to measure subscription services’ growth. If the growth rate is higher than the attrition rate, then the company has a growth in net increase. The exact opposite, of course, is also true and a negative rate of growth could mean some kind of alteration should be done.

Most companies utilize attrition rate in measuring good customer service. Keeping a customer, in most cases, may be just as vital as attracting a new one, if not more so. In fact, a company can also name its attrition rate as a marketing tool; it is not referred to by its technical term in cases like this, but rather a number of customers returning.

Companies that consistently use this promotional approach are automobile manufacturers, satellite television services, cable, and cell phone companies. These industries are known for poor customer satisfaction and a lower number of returning customers. Therefore, if they can quote a good attrition rate, it may be an indication that they are beating the standards set by the rest of the industry. In addition to the satisfaction of the customers, an attrition rate can be a term used to measure the satisfaction of the employee. Normally, many unskilled positions have higher attrition rate. Companies monitor this number for a variety of reasons.